Referendum and democracy: putting the demos on stage

The referendum takes the lesson of the squares to the heart of politics. The stakes are high: Greek destiny, the future of the European Union and of democracy is on the line.

Greek workers march against austerity in Athens. Demotix/Nicolas Koutsokostas. All rights reserved.A man visits the Australian
consulate in Athens and asks for a work visa. ‘Why do you want to leave
Greece?’ asks the official. ‘I am worried that Greece will leave the euro’
answers the man. ‘Don't worry’ responds the consul ‘I was talking to my German
colleague yesterday who assured me that Greece will stay in the euro.’ ‘This is
the second reason why I want to emigrate.’

The story expresses the
impossible dilemma facing the Greeks. On one side, a continuation of the
catastrophic austerity that has destroyed the country. On the other Grexit, a
prospect that will further hit, for an unpredictably long period, the living
standards of a people who have seen their income halved. Premier Alexis Tsipras’
announcement, early on Sunday, that the people will be asked to vote on the final
proposals of the Europeans and the IMF is an attempt to divert this typical aporia (lack of passage) towards a more
manageable question: Do the people back the government’s rejection of the worst
effects of austerity while accepting its commitment to keep the country in the
Eurozone? The stakes are high: besides the Greek destiny, the future of the
European Union and of democracy is on the line.

The immediate context of the
referendum is the behaviour of the European partners in the last few months.
The Syriza government was elected with a clear mandate to put an end to
austerity policies. These policies were carried out on two fronts, fiscal
austerity and internal devaluation. Fiscal austerity was pursued through the
reduction of public spending, the privatisation of key state assets and the
increase of tax revenues. Large numbers of civil servants were dismissed, the
social services were slashed with the health service in particular unable to
meet basic needs. The humanitarian crisis that followed is well documented and
there is no point in detailing it again. The creditors’ logic aimed to generate
primary budget surpluses, which would not be used to restart the stalled economy
but to repay the escalating debt. The previous governments had accepted the
obligation to create annual surpluses of up to 5% of GDP in the next seven
years, something that no government since Ceaușescu’s Romania
has either attempted or achieved.

The internal devaluation was
carried out through the repeated reduction of private sector wages and the
abolition of the bulk of labour law protections, such a collective bargaining. At
the same time, the repeated increase of taxes, including the regressive tax on
real estate, meant that the bleeding of the economy reached unprecedented
levels. The pauperisation of the working people, the IMF argument goes, would
improve competitiveness and help economic growth. But the result was abject
economic failure. The economy shrank by 26%, unemployment jumped to 27%, youth
unemployment went up to 60% and more than 3 million people on or below the
poverty line. The IMF admitted a couple of years ago that it had
under-calculated the adverse effect of austerity on the economy - the so-called
fiscal multiplier - by a factor of three.

A European coup

It is against this background
that the Greeks elected in January 2015 the Syriza government committed to
reverse these policies. A period of negotiations followed. But these were not
proper negotiations. The huge gap between the two parties in power resources
and ideology made the talks brutally asymmetrical. I have called these ‘negotiations’
a European
coup, an attempt at ‘regime change’ using banks and not tanks. The economic
stakes for the lenders are relatively small - the Greek economy is only 2% of
European GDP - and does not justify the risk of a breakdown in relations. The precautionary
principle of risk theory, inscribed in the European DNA, demands that the
unpredictable effects of Grexit on the European and world economy should be
avoided. If the collapse of Lehman Brothers created such a huge crisis, even
the consideration of Grexit is more dangerous

The perceived threat of a Syriza success
and of a haircut of the Greek debt, repeatedly declared unviable by the IMF, is
political not economic. The European elites fear a contagion throughout Southern Europe of the anti-austerity stance of the Greek people and government. The result in
the Spanish local elections, the Scottish anti-austerity vote and the Sinn Féin opinion poll results indicate that the people hit by austerity have started
stirring. The Syriza government is leading the attack on the ‘there is no
alternative’ neoliberal mantra. Even a limited success would show that the only
fight that cannot be won is a fight not joined.

The fear of political contagion
is the only credible interpretation of the actions of Europeans and the IMF. The
aim is clear. Either overthrow the government, if it does not accept the onerous
conditions imposed on it, or humiliate it so much as to make it impossible to
keep party and government together. There are many signs of this attempted
‘regime change’. Every time the Greek government presented to the European
leaders a political proposal solving the long-term problem of debt
sustainability, it was asked to go to the technocrats and cost it. When the Greeks
returned with a detailed costing, the lenders would challenge the political
framework behind it. The IMF insists on imposing the internal devaluation but
asks for a debt haircut to make it viable. The Europeans are more sensitive to
the democratic mandate but totally unwilling to negotiate the easing of debt.
Caught between the Scylla of a permanently increasing debt where new loans are
used to pay the earlier debt and the Charybdis of escalating austerity, Syriza
ran out of negotiating road.

The endgame moves are
characteristic of the impasse. On Thursday June 18, while Premier Tsipras was
in Russia, Reuters reported a leak from a member of the ECB Board according to
which the high street banks might not open the following Monday. It was a clear
sign to people to withdraw their savings on Friday, a self-fulfilling warning
that could amount to a criminal offence. I was having dinner with senior Syriza
members in Athens when the news broke. I was surprised and delighted by their
calm, cucumber-cool response. They decided not to give much emphasis to the
leak and play down the continuing attacks. There was no bank run on Friday
morning and while the withdrawals were greater than earlier in the week no
threat to the banking system was posed.

Alexis Tsipras and Yanis Varoufakis. Demotix/Panayiotis Tzamaros. All rights reserved.On June 25, Greece submitted a
new set of fully costed proposals. They were a major retreat from the Syriza
manifesto. They were going a long way towards the lenders position by accepting
their fiscal demands by cutting public spending and increasing taxes to a total
of 7.9 billion euros. On the other hand, the new burden was distributed in a
more just way. 70% of the new taxes was placed on the shoulders of the richer
part of society by increasing corporate tax from 26% to 29% and imposing a 12% one-off tax on corporations with profit over half a million. For the first time, the proposals were welcome by the lenders who stated that they would be the basis for agreement. But immediately afterwards, the lenders comprehensively rejected what a few hours earlier was the basis for agreement. Four days before the end of the current financial programme, the lenders increased the amount to be further bled from the economy to over 11 billion euros and reversed priorities by imposing the bulk of the new demands on the poorer part of society.

This deal was presented as a final
‘take it or leave it’ proposal. Angela Merkel called it ‘generous’, while Donald Tusk, the President of the European Council, said that, ‘the game is
over’. It became clear that the ‘negotiations’ would conclude only if the
government accepts the blackmail and abandons its ideology, its promises to the
people and the hopes it has created for both Greek and European people. In this
context, Tsipras has called the referendum asking the people to decide whether they
accept the position of the lenders.

The stalled tango between democracy and
capitalism

The post-WWII compromise between
capitalism and democracy was expressed in the most authoritative way in the
foundation of the European Union. Capitalism and democracy operate different
principles of distribution of the social output. As Wolfgang Streeck puts it in
his book Buying Time, in market or
legal justice, distribution is carried out according to market decisions and
property entitlements, including debt obligations, and is expressed in prices. Those
who fail in the market place become targets of philanthropy and police
repression if they resist. Social justice, on the other hand, is determined by
cultural norms and collective ideas of justice, fairness and solidarity. It
ensures that everyone enjoys a minimum livelihood and recognition of civil and
human rights irrespective of economic performance or productivity. Social
justice is expressed in decisions of formal and informal institutions including
elections. It acts as a corrective to the market distribution system.

Syriza has made it clear that the
future of Greece is in the Eurozone and the EU. The government’s negotiating
position, armed with the recent electoral mandate, was a desperate attempt to
retain the co-habitation of democracy and capitalism despite the hostility of
neoliberalism towards elections, people and their decisions. Late capitalism
depends on the neutralisation of democracy. Technocrats decide all major policy
decisions while bankers and finance capital appear as one constituency fighting
with the people for scarce resources.

The Greek proposal could change
the political landscape. ‘Referendum’ is a dirty word in the Brussels corridors. The elites have
been traumatized by popular rebuffs in France, the Netherlands, Ireland and
Poland among others and they cancelled the Papandreou proposal to hold a referendum
in 2012. The European elites, who have felt unassailable since 1989, are sensing the
popular anger and cannot comprehend it. The Tsipras proposal brings back the fear
elites feel when the people momentarily enter onto the political stage. The referendum will be an encounter with the
anti-austerity resistance of the Greek people and in direct contact with the
occupation of Syntagma Square in 2011. It places the people at the centre of
politics and prefigures an institutional framework in which direct democracy
becomes a permanent supplement to its representative part.

An amazing
experiment in direct democracy took place in Syntagma and the many other
squares of the world. The Syntagma multitude both
mimicked and creatively subverted the principle of representation and state
organization. In daily assemblies and an elaborate network of working groups,
Syntagma offered a microcosm of a future democratic state operating under a
strict axiom of equality. The Syntagma multitude was not a suffering and victimized
population. It was an active and creative people performing radical democracy
and taking their fate in their own hands. After Syntagma, the Syriza victory
and the radical change of Greek politics was destined.

The referendum
takes the lesson of the squares to the heart of politics. The people are asked
to decide directly their future. Syriza and the Greek opposition will be judged
in the next few days. At a Guardian debate last Wednesday and in various
interviews I was asked ‘Can Greece be saved’. The breathlessness of the
reporting gives the impression of a pending apocalypse. It may be useful to the
media but it has nothing to do with reality. The sun will rise over the
Acropolis again tomorrow, the owl of Athena will fly at dusk as Hegel noted. Despite
the doomsayers the people remain calm, stoical, aware of the significance of
the historical moment. The longevity of the Hellenes is much greater than that
of most doubters.

But the
referendum puts the European elites too before a major
dilemma: do they respect the democratic decisions of people or are the demands
of banks, financiers and their political and media friends the holy writ of new
Europe? The Greek people give the European Union a chance to restate its
commitment to the values of the Enlightenment – equality, freedom, solidarity – and the principles of its own foundation. In a strange way, the place where
democracy was born gives us a chance to re-commit to its ideals in the 21st
century.

If you enjoyed this article then please consider liking Can Europe Make it? on Facebook and following us on Twitter @oD_Europe

About the author

Costas Douzinas
is Professor of Law at Birkbeck College, University of London and Member of the
Greek Parliament for Pireas. His latest book Syriza in Power: Reflections of an Accidental Politician was
published by Polity in 2017.

This article is published under a Creative Commons Attribution-NonCommercial 4.0 International licence.
If you have any queries about republishing please contact us.
Please check individual images for licensing details.

Recent comments

openDemocracy is an independent, non-profit global media outlet, covering world affairs, ideas and culture, which seeks to challenge power and encourage democratic debate across the world. We publish high-quality investigative reporting and analysis; we train and mentor journalists and wider civil society; we publish in Russian, Arabic, Spanish and Portuguese and English.